22 Feb

Understanding your Credit Report

General

Posted by: Maria Solverson

Understanding your credit report is an important step in taking ownership of your financial success. It would help if you thought of your report as a tool to prove to lenders, service providers and in some cases employers, that you are financially stable and responsible. It basically lets other people know they can trust you with their money. Here are some reasons for checking your credit report a couple of times a year is important.

Many of us still believe the misconception that checking your credit report will have a negative impact on your score. On the contrary, checking your own credit report does not count as a hit against your score and is important to help against the following reasons.

In Canada, we have two reporting agencies (Equifax and TransUnion) that report all credit you have extended. It is important to check to verify the information they both have on your file, sometimes items get reported incorrectly. By finding the errors in your report first, you will avoid running into any discrepancies when we request your report. Having errors on your report can bring down your score and take many months to fix.

By reviewing your report, you also protect yourself against identity theft. If your information is compromised and credit was extended without your authorisation, seeing your report first hand would allow you to catch any errors possibly before being contacted by a third-party agency. If you do see any information on your credit report, you believe shows someone is taking out credit in your name, please contact your municipal or provincial law enforcement right away.

Having a strong credit report will help get better rates when applying for a mortgage. The banks look at the overall report and how you manage borrowing and debt when they are deciding to lend money. They look at the score, the balance to limit ratio, any late payments and if you have had difficulty managing credit in the past.

Checking and understanding your report is very important to know and where you stand in the lending world. Your score is among the most important steps towards building a better financial future. It shows where you can start working to build or rebuild your credit. It doesn’t hurt you to pull your report if you use the links below. These links are a soft inquiry and wont negatively impact your score.

Here is how to obtain your FREE credit report with Equifax and TransUnion:

https://www.consumer.equifax.ca/personal/education/credit-report/how-to-get-a-free-credit-report/

https://transunion.ca/product/consumer-disclosure

I am always here for advice on how to build a strong report and explain how the banks use this information when approving loans.

1 Feb

What is the Home Buyer’s Plan (HBP)?

General

Posted by: Maria Solverson

The Home Buyers Plan (HBP) is a federal government program that allows you to withdraw up to $25,000 from your registered retirement savings plans (RRSPs) to buy or build a qualifying home using the funds for a down payment and other cost associated with purchasing.

If you buy the qualifying home together with your spouse or common-law partner, or other individuals, each of you can withdraw up to $25,000 tax-free.

Do you meet the HBP eligibility conditions? (according to Canada.ca)

Or

  • You must have a written agreement to buy or build a qualifying home for a related person with a disability or to help a related person with a disability buy or build a qualifying home (obtaining a pre-approved mortgage does not satisfy this condition).
  • You must intend to occupy in the qualifying home as your principal place of residence within one year after buying or building it. If you buy or build a qualifying home for a related person with a disability, or help a related person with a disability buy or build a qualifying home, you must intend that that person occupies the qualifying home as his or her principal place of residence.
  • Do you meet the RRSP withdrawal conditions?

The funds you use for the HBP program must be repaid back into your RRSPs within 15 years. Otherwise, if you do not repay the amount due for a year, 1/15th of the amount you withdrew will be included in your income for that year. It’s a really good idea to set up automatic withdrawals every month so you don’t have to worry about making sure you contribute enough at tax time.

The funds must be in your RRSP for at least 90 days before they can be withdrawn for a down payment. Make sure you plan accordingly so the funds are in the RRSP for the allotted time.

Following is a complete guide that contains all the information you will need.  Also included is the application form.

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan.html

https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t1036.html